© 2017 ATI. All rights reserved.
Second Quarter 2017 Conference Call
July 25, 2017
© 2017 ATI. All rights reserved.
Forward-Looking Statements
This presentation contains forward-looking statements. Actual results may differ
materially from results anticipated in the forward-looking statements due to various
known and unknown risks, many of which we are unable to predict or control. These
and additional risk factors are described from time to time in the Company’s filings
with the Securities and Exchange Commission, including its Annual Report on Form
10-K for the year ended December 31, 2016.
© 2017 ATI. All rights reserved.
3July 2017
ATI is an aerospace and industrials
company with small and important
exposure to commodity products.
We are focused on innovative
technologies and the power of
materials science.
© 2017 ATI. All rights reserved.
4July 2017
Q2 2017 Highlights
High Performance Materials & Components segment
Revenue of $526 million
Operating profit of 12.9%
• Strong next-generation product mix
Flat Rolled Products segment
Revenue of $354 million
Operating profit of $3 million
• Falling raw materials prices
Extended ABL term loan and revolving credit facility
$millions except EPS Q2 2016 Q2 2017
Revenue $810.5 $880.2 9%
Net income (loss)* $(18.8) $10.1
EPS $(0.18) $0.09
*Attributable to ATI
© 2017 ATI. All rights reserved.
5July 2017
Power of the mix
Compared to Q1 2017
Mix of next-generation jet engine products improved
Segment sales increased 3%
Segment operating profit increased 34%
ATI High Performance Materials & Components
Segment ($millions)
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Sales $493.0 $498.4 $461.8 $477.2 $510.4 $526.4
Operating Profit $29.1 $38.8 $47.0 $53.8 $50.9 $68.0
% of Sales 5.9% 7.8% 10.2% 11.3% 10.0% 12.9%
Markets – comparing 1H 2017 to 1H 2016
• Revenue increased 5%
• Jet engine sales increased 11%
• Airframe sales were flat
2Q 2017 Operating profit
• Achieved low double-digit operating profit as % of sales
• Includes $2 million BPO start up expense
Q2 2017
40% of ATI’s Jet Engine
market sales were next-
generation products
© 2017 ATI. All rights reserved.
6July 2017
ATI Flat Rolled Products
Segment ($millions) Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Sales $264.5 $312.1 $308.7 $318.9 $355.5 $353.8
Operating Profit (Loss) $(109.6) $(31.8) $(20.8) $(0.8) $19.0 $2.9
% Sales (41.4)% (10.2)% (6.7)% (0.3)% 5.3% 0.8%
Markets – comparing 2Q 2017 to 1Q 2017
• Revenue was essentially flat
Operating profit
• Operating profit of $3 million, $22 million YTD
• Conversion costs improved
• Raw materials decline offset operating profit
• Nickel monthly average
• February $4.82/pound
• June $4.03/pound
• Benefits of cost restructuring and mix
$2.00
$3.00
$4.00
$5.00
January February March April May June July
LME Nickel Cash 2017
Month average
© 2017 ATI. All rights reserved.
7July 2017
Cash and liquidity at 6/30/2017• $155 million cash on hand
• $250 million available on ABL
• $25 million cash flow from operations in Q2 2017, including $51 million
MWC increase
Capital expenditures• $55 million in 1H 2017; $125 million expected in 2017
• Annual depreciation expected $160 million in 2017
• Beyond 2017, annual capex expected to be no more than $100 million
Extended ABL and term loan to 2022• Better terms
Financial
Closed and other $(8-10) million
Use for quarterly modeling
© 2017 ATI. All rights reserved.
8July 2017
Diversified Markets – Percent of ATI YTD 2017 Sales
Growth DriverKey Market
1H
2017
Aerospace and Defense 49%
Oil & Gas 11%
Automotive 8%
Medical 6%
Electrical Energy 5%
Aerospace and Defense
Commercial Aerospace 41%
Jet Engine 27%
Airframe 14%
Government Aero/Defense 8%
Direct International Sales of 40%
CFM LEAP
ATI is an aerospace and industrials company with small and
important exposure to commodity products. We are focused on
innovative technologies and the power of materials science.
© 2017 ATI. All rights reserved.
9July 2017
Jet Engines Strong demand for next-generation alloys
and forgings
• Next-generation alloys as leading indicator
• Forged product sales increased 27% in 1H 2017
• Castings making progress in return to profitability
• ATI’s content growth on next-generation continues
• New P&W LTA plus new GE Aviation joint
venture announced
Government Aerospace & Defense
• Navy’s shipbuilding plan expected to benefit ATI
• Gained share on F-35 engine
• Opportunities for our flowformed products
Aerospace & Defense Market
Airframes • 1H 2017 demand for titanium mill products steady
• Expect improved product mix in 2H 2017
2013 2014 2015 2016 2017F 2018F 2019F 2020F
Next
Generation
Legacy
Nu
mb
er
of E
ng
ine
s
© 2017 ATI. All rights reserved.
10July 2017
Pratt & Whitney LTA
• Revenue in excess of $1 billion from 2017 to 2030
• ATI gains content on GTF and F135 engines
• Currently have a differentiated titanium alloy, titanium
castings and forgings on the GTF
• Nickel-based powder-to-isothermal forging package
• Forging conversion has begun
• ATI to be qualified for P&W powder production
• Enabled by new Bakers Powder Operation
New Long-Term Agreement with Pratt & Whitney
©2017 United Technologies Corporation, Reproduced
with Permission – All Rights Reserved
Pure Power® Geared Turbofan™
© 2017 ATI. All rights reserved.
11July 2017
Meltless Titanium Alloy Powder JV with GE Aviation
GE Aviation joint venture
• Develop meltless titanium alloy manufacturing technology
• ATI (51%) GE Aviation (49%)
• Transformational process for powders particularly 3D printing
Phased approach
• Pilot scale facility to be in operation in 2019
• Located on ATI-owned property
• Cost within ATI’s capex guidance
• Upon demonstration, larger facility will be constructed
Novel process
• Reduces steps in producing titanium alloy powders
• Lower cost raw material inputs
• Production of alloys not possible using existing technologies
Goal - enable expansion of 3D printing
• Target markets are aerospace, medical, defense, space, and
transportation
© 2017 ATI. All rights reserved.
12July 2017
0
10
20
30
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60
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90
1950
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2020
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2200
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2240
2250
2260
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2290
2300
2310
MaturityR&D/Introduction Growth Decline
ATI 718TM
ATI’s differentiation in jet engines
Next-generation growth
This example is representative
and is not a complete list
Market Share Growth Thru Relentless Innovation
3D printing
Nickel-based and
specialty alloy powder
Titanium-alloy powder
• Meltless titanium alloy
powder development
Technology driven; Manufacturing capabilities enabled
ATI 718Plus
ATI 720
Rene 65
Ni Powder Billet P&W development
adds to growth
Economic Moat Grows Wider
Key AM Powder Revenue Programs
TiAl powder for next-generation jet engine LPT blades
CoCrMo for next-generation jet engine fuel nozzle
Cu powder for space applications
© 2017 ATI. All rights reserved.
13July 2017
Jet Engine Alloys and Components
Growth Driver
© 2017 ATI. All rights reserved.
14July 2017
FRP was profitable during a period of low and falling RM
Flat Rolled Products Operations Improvement
Continuous Improvement
• 40% improvement in heat casting sequence
• 8% process yield improvement at finishing operation
• HRPF-enabled practices opens capacity at specialty plate operation
Improving Product Mix
• Gaining share with HRPF-enabled products
HRPF Conversion Update
• Working on both domestic and international opportunities
• 5 projects at trial/evaluation stage; discussions with others
• Significant HRPF utilization and cash generation potential
Focus on Continuous Improvement and improving product mix
$2.00
$3.00
$4.00
$5.00
January February March April May June July
LME Nickel Cash 2017
$-
$0.0500
$0.1000
$0.1500
$0.2000
$0.2500
$0.3000
$0.3500
January February March April May June July August
ATI FRP Type 304 Surcharge 2017
nickel ferrochrome
Month average
© 2017 ATI. All rights reserved.
15July 2017
High Performance Materials & Components segment
• 10% revenue growth in 2017 with low double-digit operating margins
• Sustained strong performance in commercial aerospace
• Caution that legacy-to-next generation transition may result in
uneven quarterly operating profit performance due to product mix
• Improving airframe mix in 2H
Flat Rolled Products segment
• Visibility for the second half
• Operations and mix improving
• Cautious due to raw materials volatility
• Maintain low-single digit operating profit as a % of sales for 2017
• Assumes current raw materials prices
• Our strategy is to position FRP to be profitable and generate cash
regardless of raw materials prices or trade policy.
Strategy & Outlook
Source: ATIMetals.com
© 2017 ATI. All rights reserved.
Second Quarter 2017 Conference Call
Q&A
© 2017 ATI. All rights reserved.
18July 2017
ATI is a global manufacturer of technically advanced specialty materials and
complex components. With revenue of $3.3 billion for the twelve-month
period ending June 30, 2017, our largest market is aerospace & defense,
particularly jet engines. We also serve the oil & gas, electrical energy,
medical, automotive, and other industrial markets. ATI is a market leader in
manufacturing differentiated specialty alloys and forgings that require our
unique manufacturing and precision machining capabilities and our
innovative new product development competence. ATI produces nickel-
based alloys and superalloys, titanium alloys, specialty alloys, stainless
steels, and zirconium and other related alloys in many mill product forms.
We also are a leader in producing nickel-based alloy and titanium-based
alloy powders for use in next-generation jet engine forgings and 3D-printed
products.
Creating Value Thru Relentless Innovation™